Big Short Investor Bets One Point One Billion Pounds Against Leading Artificial Intelligence Shares

Michael Burry, the renowned hedge fund manager who rose to fame during the global financial crisis after successfully betting against the United States housing market, is now wagering £1.1bn against two of the most prominent artificial intelligence related firms. Burry, 54, and the inspiration for Christian Bale’s character in ‘The Big Short’, has disclosed substantial put option holdings in both Nvidia and Palantir Technologies through his investment firm, Scion Asset Management.

Regulatory filings reveal that Scion has purchased put options covering one million Nvidia shares, worth approximately £150 million, and five million Palantir shares, valued at £730 million as of 30 September. Put options profit when share prices fall, signalling Burry’s bearish outlook on both companies amid what he describes as an ‘AI bubble’.

Burry returned to social media after a lengthy hiatus to warn his 1.4 million followers that ‘sometimes, we see bubbles. Sometimes, there is something to do about it. Sometimes, the only winning move is not to play.’ His warning appears to coincide with growing unease surrounding surging valuations in the AI sector.

Nvidia, which recently became the world’s first £4 trillion company, saw its shares fall by 4 percent to close at £156.82 in New York trading on Tuesday. Palantir, renowned for its data analytics prowess and up almost 360 percent over the year, is now the most expensive stock on the S and P 500 by price to earnings ratio. While the company reported record quarterly revenue, it is currently trading at nearly 250 times its twelve month forward earnings, compared with 33 for Nvidia and under 30 for Microsoft.

Palantir’s chief executive, Alex Karp, responded to Burry’s bet with scepticism, labelling the short as ‘batshit crazy’. Karp told CNBC, ‘The two companies he is shorting are actually the ones making all the money, which is super weird. The idea that chips and ontology is what you want to short is odd. He’s actually putting a short on AI – it was us and Nvidia’.

Chief executives of Morgan Stanley and Goldman Sachs added their voices to concerns over a potential market correction, highlighting that after a record breaking year driven by artificial intelligence optimism, equity markets could be due a 10 to 15 percent pullback. The surge in generative AI investments is frequently compared to the late 1990s dotcom bubble, although some analysts argue the current boom is underpinned by robust earnings rather than speculative borrowing.

This unfolding scenario has injected a note of caution into global markets, as the artificial intelligence rally faces potential volatility ahead.